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The HSBC India Manufacturing Purchasing Managers’ Index (PMI) – a measure of factory production – dropped slightly from 51.3 in November to 50.7 in December.
A PMI reading of more than 50 per cent indicates expansion, while a reading below 50 per cent indicates contraction.
Despite a slight deceleration in December, the manufacturing sector activity expanded for the second consecutive month.
“Today’s numbers show that growth remains moderate and struggles to take off due to lingering structural constraints,” HSBC Chief Economist for India and ASEAN Leif Eskesen said.
Overseas orders came in at a faster pace in December, compared to slowing domestic demand, says HSBC.
Although the reports of the global banking giant said the Indian manufacturing sector ended 2013 on an encouraging footing. Operating conditions improved for the second successive month in December, as both output and new orders increased, HSBC said.
Consequently, firms raised their workforce numbers further in December, the survey noted.
New orders placed at Indian manufacturers rose in December, albeit marginally. The higher levels of new work was largely driven by improved domestic and overseas demand.
Export order growth was registered for the third consecutive month.